Designing dynamic reverse logistics network for post-sale service.

Abstract

The paper addresses the problem of designing a multi-country production–distribution network that also provides services such as repairs and remanufacturing. The proposed work concentrates primarily on post-sale service provided by the firm under warranty returns. The proposed model assumes that existing warehouses can also serve as collection centres or repair centres for reverse logistics. In addition, the model also explores the possibility of establishing a new facility. Hybrid facilities are considered because of their huge cost-cutting potential due to equipment sharing and space sharing. The capacity of hybrid facilities can be expanded to a predefined limit to process returned products without hampering forward logistics operations. However, if a product cannot be repaired at the warehouse, it is transported to the plant for remanufacturing. The model optimizes the overall configuration and operation cost of the production–distribution network. The production–distribution model developed in the paper is a mixed-integer nonlinear program (MINLP) that is later transformed to a mixed-integer linear program to reduce the solution time. The usefulness of the model is illustrated using a randomly generated dataset. The model identifies (a) the optimal locations/allocations of the existing/new facilities, (b) the distribution of returned products for refurbishing and remanufacturing, and (c) the capacity expansion of the existing plants and warehouses to facilitate remanufacturing and repair services.